FTC attacks Facebook to defeat Instagram and WhatsApp buyout

The FTC announced Facebook’s lawsuit in a major new antitrust case. In question, the takeover of Instagram and WhatsApp which would have damaged competition in the social networks market.

WhatsApp, Messenger et Instagram

WhatsApp, Messenger and Instagram applications // Source: Frandroid

For several months, the United States has stepped up to the plate on the issue of the weight acquired from large tech firms such as Apple, Google, Microsoft and Facebook. It is the latter who is now the subject of a complaint by the American FTC, equivalent in some way to the French DGCCRF, since it also supervises fraud and commercial competition between companies. The FTC believes that Facebook has hurt competition by taking over companies that were still nascent then, like Instagram and WhatsApp, in an attempt to pull competitors out of the market.

This major new antitrust case is led by the FTC, and monitored by 47 regional or state prosecutors in the United States.

Over $ 23 billion in buyouts in the sights

So particularly targeted are the buyouts of Instagram in 2012 for almost $ 1 billion, and WhatsApp in 2014 for $ 22 billion. In its complaint, the FTC announces that it wishes to cancel the takeover of these two companies by Facebook. This means that the two services would regain their independence. The firm reacted strongly to this attack, recalling that these redemptions had been validated in their time by the competent authorities.

Years after the FTC cleared our acquisitions, the government now wants to turn back the clock regardless of the impact this precedent would have on the entire business community or on the people who choose our products every day .

In recent months, Facebook has particularly brought its services closer together to make them intercompatible. In July, the firm released an update allowing Facebook Messengers and WhatsApp users to chat with each other .

Bad practices for redeemed applications

The FTC wants to look at the changes made by Facebook on the WhatsApp and Instagram applications. In particular, the way in which Facebook might have decided to absorb data from WhatsApp users, against the wishes of its original creators, and thus make the messaging service less virtuous for the consumer.

The Verge site recalls that Brian Acton, co-founder of WhatsApp publicly expressed his differences with the direction taken by Facebook by slamming the door of the firm, followed shortly after by the other co-founder of WhatsApp, Jan Koum. Instagram founders Kevin Systrom and Mike Krieger also left Facebook after years of internal issues with the group’s leadership.

Mark Zuckerberg’s Too Much Sentence

The FTC case relies, among other things, on internal Facebook emails revealed this summer in the United States. In one, sent by Mark Zuckerberg to David Ebersman, then the group’s finance manager, the businessman explains that the purpose of the Instagram buyout is to slow down competition from Facebook.

One way of looking at it is that what we really buy is time. Even though new competitors emerge, buying Instagram, Path, Foursquare, etc. now will give us a year or more to integrate their dynamics before anyone can approach their size again. Meanwhile, if we integrate the social mechanics they used, these new products won’t have much of an impact since we will have already deployed their mechanics at our scale.

In an email sent less than an hour later, Mark Zuckerberg corrected himself by saying “I did not mean to imply that we would buy them out to prevent competition with us”, a self-correction that could be seen as an admission.

In September, the FTC had already placed Google in its sights for an antitrust case concerning its advertising activity, and more precisely its Google Ad Manager tool . Apple is also at the center of several investigations in the United States and by the European Union. As a preventive measure, Apple could soon offer alternatives for its applications on iOS devices .

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